The South African government has agreed to grant a $2.8 billion guarantee to struggling state-owned logistics company Transnet, the Ministry of Transport revealed on Thursday (22).
According to an article published by Reuters, Transnet has for years struggled to provide adequate freight rail and port services due to equipment shortages and maintenance delays linked to underinvestment, with cable theft and vandalism further crippling the rail network.
The support package includes a $2.2 billion guarantee to cover Transnet’s financing needs for the 2025-26 and 2026-27 fiscal years, as well as a $557 million credit facility to help pay debt service and make capital investments. In a statement, Transnet said the support would allow it to build on progress made in strategic reforms of the rail and port sectors.
This past April, the United National Transport Union (UNTU) at Transnet threatened to go on strike after wage negotiations failed, potentially disrupting the transport of minerals and agricultural products. In response, South Africa’s Commission for Conciliation, Mediation and Arbitration (CCMA) proposed a settlement that includes a 6% annual wage increase for all employees over three years starting in April 2026, applied retroactively.
Transnet also committed to avoiding compulsory layoffs during this period, according to the union—which represents over 26,000 of the roughly 46,000 employees—via a statement posted to its X (formerly Twitter) account on Tuesday (20).
The wage dispute comes as Transnet tries to recover from years of corruption and theft while dealing with deteriorating equipment that poses a significant threat to South Africa’s economy and exports. Inefficiencies in rail and port infrastructure have driven coal and iron ore exports to multi-decade lows, costing the country more than $21.8 billion in 2022, according to the National Treasury.
A World Bank study ranks Transnet-run ports—despite the company’s $7.5 billion debt—among the least efficient in the world, a classification the company disputes.
Source: Diário Económico
